For contractors in today’s construction market, one of the biggest challenges is figuring out how much liability insurance is “enough.” Between client demands, complex contracts, and the risks that come with every job site, it’s not as simple as buying a standard Commercial General Liability (CGL) policy and calling it a day. The truth is, your liability limits can make or break your ability to secure projects, protect your business, and avoid costly disputes.
In this article, we’ll break down what contractors should consider when deciding on liability limits, how contract requirements play a role, why additional insured endorsements matter, and what it means for your protection when others are named on your policy. Finally, we’ll introduce you to BGES Group, a trusted insurance partner serving contractors in New York, New Jersey, and Connecticut.
Why Liability Insurance Matters More Than Ever
Every project you take on carries inherent risks—bodily injury, property damage, completed operations claims, and more. Liability insurance is designed to protect you from lawsuits and claims that could otherwise cripple your business.
But here’s the catch: liability insurance isn’t just about covering accidents. It’s about meeting client requirements and positioning yourself as a professional, reliable contractor who can take on bigger, better jobs. Without adequate coverage, you risk losing contracts or facing devastating out-of-pocket costs.
Contract Requirements: The First Factor to Consider
For most contractors, liability limits aren’t determined by preference—they’re dictated by the contracts you sign.
- Owner and Developer Requirements: Many project owners will specify the minimum CGL limits required before you can step foot on the job. A small residential remodel may only require $1 million per occurrence, while a commercial development might demand $5 million or more in total coverage.
- Municipal and Government Work: Public projects often have stricter insurance requirements, including higher limits and specific endorsements, before permits are even issued.
- General Contractor/Subcontractor Agreements: If you’re a subcontractor, your general contractor may require that you carry equal or greater limits than they do, plus name them as an additional insured.
Bottom line: before bidding on any job, carefully review the insurance provisions in the contract. This will help you determine whether your existing policy is sufficient—or if you need to increase your limits to compete.
Project Size and Scope: Tailoring Coverage to the Job
Even if your contracts don’t specify limits, the type of work you perform should guide your decision.
- Small Jobs: Residential repairs or maintenance work may only justify lower liability limits.
- Mid-Size Projects: Facade restoration, roofing, or interior renovations typically require higher limits due to greater exposure.
- Large-Scale Construction: Ground-up builds, structural work, or projects with cranes and heavy equipment can present multimillion-dollar risks, often requiring excess liability (umbrella) policies.
A good rule of thumb: the bigger the job, the higher the limits you should carry.
Additional Insureds: Transferring Liability—But at a Cost
One of the most overlooked parts of liability insurance is the additional insured requirement.
When you name a client, general contractor, or property owner as an additional insured, you are extending your insurance protection to them. This is designed to transfer liability away from them and onto you.
For example, if a third party sues both you and the property owner for a jobsite accident, your insurance could end up defending and paying on their behalf.
While this is standard in construction, contractors often don’t realize the downside:
- Shared Limits: Every dollar spent defending or indemnifying an additional insured comes out of your policy limits.
- Depleted Protection: If multiple parties are added as additional insureds—and claims arise—you could see your own coverage depleted before it’s needed to defend your business.
- Ongoing Obligations: Some contracts require that you keep the client listed as an additional insured even after the project is completed, exposing you to long-tail risks.
This doesn’t mean you can avoid granting additional insured status. But it does mean you need to carefully weigh your limits and possibly increase them to ensure you’re not left exposed.
Balancing Risk Transfer and Self-Protection
In construction, risk transfer is part of the game. You’ll transfer some risks downstream to subcontractors, while upstream parties will push them onto you. The key is to strike a balance:
- Get Certificates from Subcontractors: If you use subcontractors, require proof of insurance naming you as an additional insured.
- Review Contracts Before Signing: Don’t blindly accept terms that overextend your liability.
- Work with an Insurance Professional: A knowledgeable broker can help negotiate terms, secure endorsements, and structure your coverage so that you’re not carrying more than your fair share.
So, How Much Liability Coverage Do Contractors Need?
There’s no one-size-fits-all answer, but here’s a practical framework:
- Start with at least $1,000,000 per occurrence / $2,000,000 aggregate—the industry baseline for most contractors.
- Add excess liability (umbrella) coverage to meet contractual demands or if you regularly work on larger projects. Limits can range from $2 million to $10 million or more, depending on the job size.
- Adjust based on contracts and project type. Always let your work and your clients’ requirements guide your limits.
Remember: the cost of carrying higher limits is small compared to the financial devastation of an uncovered claim.
Who We Are: BGES Group
At BGES Group, we specialize in serving contractors just like you. For decades, we’ve helped construction businesses across New York, New Jersey, and Connecticut secure the liability protection they need to compete, grow, and thrive.
Our team understands the unique challenges contractors face—contract requirements, certificates of insurance, additional insured endorsements, and risk transfer. We know the local market, the carriers, and the pitfalls that trip up contractors who try to navigate insurance on their own.
When you work with BGES Group, you get more than just a policy. You get a partner who will:
- Review your contracts and advise on insurance requirements.
- Help you structure your coverage to protect against both jobsite risks and additional insured obligations.
- Provide fast turnaround on certificates so you never lose time waiting for paperwork.
- Offer guidance on risk management so you can reduce claims and keep premiums competitive.
Contact BGES Group Today
If you’re a contractor in New York, New Jersey, or Connecticut and you’re asking yourself, “Do I have enough liability coverage?”—it’s time to talk to BGES Group.
📞 Phone: (914) 806-5853 – Gary Wallach
📧 Email: bgesgroup@gmail.com
🌐 Website: www.bgesgroup.com
Don’t leave your business exposed. Let BGES Group help you determine the right coverage, navigate complex requirements, and secure the protection you need to grow with confidence.